Currency news / July 3, 2025

GBP volatility on UK political and fiscal risks

3 min read Thanim Islam

Thanim IslamJuly 3, 2025

Market snapshot:

Doubts of Reeves' future eased this morning with Starmer support
US data in focus before 4th of July celebrations

Yesterday's currency recap

GBP was the worst performing major currency in the world yesterday as mounting speculation surrounding UK Chancellor Rachel Reeves’ potential departure made markets nervous about the state of Britain's debt.

Despite official denials quelling speculation later in the session, investor caution remained palpable. Yields on 30-year gilts climbed by over 20bp, as market participants positioned themselves for potential leadership change and the heightened possibility that a new chancellor could alter the government’s established fiscal stance.

ADP payrolls stateside were a big miss, with 33,000 jobs lost in June versus an expected 98,000 job additions; however, market impact was minimal with the dollar supported on the news that Trump reached a deal with Vietnam.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	-0.78%	2.0718
GBPCAD	-1.10%	1.8545
GBPCHF	-0.80%	1.0787
GBPDKK	-0.80%	8.6177
GBPEUR	-0.80%	1.155
GBPJPY	-0.70%	195.705
GBPNOK	-0.70%	13.7411
GBPNZD	-0.57%	2.2408
GBPSEK	-0.20%	13.0008
GBPUSD	-1.00%	1.3618

*Daily move - against G10 rates at 7:00 am, 03.07.25
** Indicative rates - interbank rates at 7:00 am, 03.07.25

Key data points

Currency	Event	Period	Consensus	Previous
USD	Nonfarm Payrolls	Jun	110,000	139,000
USD	Average Hourly Earnings MoM	Jun	0.30%	0.40%
USD	Average Hourly Earnings YoY	Jun	3.80%	3.90%
USD	Unemployment Rate	Jun	4.30%	4.20%
USD	ISM Services	Jun	50.70	49.90
USD	ISM Prices Paid	Jun	68.60	68.70
USD	ISM Employment	Jun		50.70
USD	ISM New Orders	Jun		46.40

What we think

Gilts have gained this morning after Keir Starmer told the BBC last night that Rachel Reeves will stay on as Chancellor. Yields on gilts have eased a tad this morning and GBP is mildly supported to start the day. The Swiss franc is also supported this morning following a higher-than-expected CPI print this morning.

Big day for US data today, so, once again, following the spotlight on the UK yesterday, the dollar may be back in focus. As ever, the key will be the state of play in the US job market and whether there is any cause for concern. Recent US economic indicators have painted a conflicting picture, with stronger-than-anticipated JOLTS figures followed by a disappointing ADP report. The dollar has rebounded over the last couple of days so a better than expected series of numbers could lend more support for the greenback.

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